DUBAI, Nov 28 (Reuters) - The Saudi Arabian central bank’s foreign reserves rose in October for the first time since June, in a sign that higher oil prices and government austerity steps are reducing pressure to draw down the assets, official data showed on Tuesday.

The bank’s net foreign assets rose by $8.3 billion from September to $485.9 billion last month; they shrank by 9.3 percent from a year ago. The reserves peaked at $737 billion in August 2014 before starting to drop as oil prices plunged.

The government has been liquidating the reserves to cover a big budget deficit caused by low oil export receipts, and to build up its top sovereign wealth fund, the Public Investment Fund, which is becoming a key force in developing the economy.

Riyadh’s fiscal picture has been improving this year, however, as the Brent oil price rebounds to two-year highs near $65 a barrel and austerity measures, including increases in taxes and fees, narrow the deficit.

For the first nine months of 2017, the state budget deficit totalled 121.5 billion riyals ($32.4 billion) riyals, down 40 percent year-on-year. In addition, the government has succeeded in covering part of the deficit with domestic issues of Islamic bonds in the second half of this year.

The foreign assets are partly in the form of securities holdings, which edged up by $1.1 billion in October to $329.6 billion, and partly in foreign bank deposits, which jumped by $9.3 billion to $99.5 billion.

Outstanding bank loans to the private sector in October shrank 1.2 percent from a year earlier, the eight straight month of falling bank lending - a sign that the economy remains weak because of the austerity policies. (Reporting by Andrew Torchia, Editing by William Maclean)